2009 Legislation Grant

The 2009 legislation expanded local governments' authority to use tax increment financing (TIF) and special taxing districts (other than Baltimore City which requires amendments to its charter to activate the new authority). Local governments already have enabling authority to use TIFs to finance public infrastructure and special taxing districts to provide security for repayment of TIFs and the provision of certain services within such a district. However, the new law enhanced these powers at designated TODs.

TIF Authority Expansion

The new law in 2009 expanded a local government's TIF authority at designated TODs in the following ways:

The local government can use the Maryland Economic Development Corporation (MEDCO) to issue the TIF bonds (in other locations, the local government needs to be the bond issuer). Therefore, counties do not need to bear the cost or have the expertise required to issue TIF bonds at designated TODs.

The local government can dedicate any local tax to the TIF and not just the local property tax (e.g. the local hotel, amusement, and income tax) to support the TIF bond thus increasing the potential size of the financing and the security for its repayment.

Special Taxing District Authority Expansion

The new law in 2009 expanded a local government's Special Taxing District authority at designated TODs in the following ways:

The Special Taxing District can be used as security for repayment of a TIF bond that is used to finance public infrastructure that is not owned by the county/city. This enables TIF to be used to finance construction of a road, garage or other infrastructure that is owned by the State (including owned by MEDCO). In some cases, the local government does not want to own the infrastructure and this new authority allows this option.

The Special Taxing District funds can be paid directly into a fund to support:

The creation of public infrastructure rather than solely be used as security or funding for a bond

The operations and maintenance of public infrastructure in the Special Taxing District. In these ways, designation gives the local government additional flexibility and authority to finance, operate, and maintain infrastructure at designated TODs.